Chart pattern formation and classical support on Scomi

Smart Finance

With its 20-day moving average turning down and current price action below the 20 and 50-day moving averages, the current trend for Scomi requires much attention. Chart pattern formation suggests that a potential head and shoulders top is in place for Scomi. This is supported by a bearish divergence seen in the MACD coupled with a decline in volume as prices moved higher.

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A clear violation below its neckline support at RM0.60 may see a downside breakout with a potential target to RM0.37 as measured from the distance between the recent high of RM0.825 to the neckline support. However it must overcome its strong support at RM0.47 which corresponds to a classical support and the 61.8% Fibonacci retracement from its Oct 2008 low to its recent June 2009 high. Immediate resistance now is at RM0.66 which also coincides to its 50-day moving average followed by a stronger resistance at RM0.715.

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